How to develop a UK expenses policyHow to develop a UK expenses policy

Proven expenses technology can help to save thousands of pounds by encouraging more accurate staff claims, particularly around mileage, but it can’t do it without the clear guidelines in place to begin with.

Even the best expenses technology deployments need to be supported by the very best expenses policies. Staff expenses may be necessary and legitimate, but organisations are seemingly spending millions each year covering them based on fuzzy rules, historical beliefs and poor controls. This can have quite an impact on a company’s bottom line.

An expenses policy provides employees with a high level view of what is expected and specifically guides the employee on what is and isn’t an acceptable expense for the company. A policy also provides the practical advice for how claims can be made, the company’s procedure of adhering to policy, processing an expense and monitoring the claims.

For the company, an expenses policy can and will save money and improve efficiency. By implementing an expenses policy all of the company’s employees know where they stand, what they can and can’t claim for and to what limit.

For mileage, one of the largest areas of conflict, the policy can explain how and why journeys are routed a specific way [usually the shortest, as opposed to the quickest, distance between two locations]. Financially, an expenses policy cuts the cost of doing business by providing a robust expenses control function. It also throws out the era of ‘guesstimate’ loopholes and culturally engrained ‘fiddles’ that have occurred in the past. The grey areas are gone and there is a clear mark between acceptable and unacceptable.

How to create a perfect policy

The place to start with an expenses policy is to develop a list of the legitimate expenses that suits your business and the sector, industry and ethos or image of your company. This doesn’t have to be the final list, you can always add further expenses items later – should you miss anything.

Once done, think about where existing staff spend typically falls. Do you have sales personnel that travel a lot? Do they entertain clients etc? What are the average costs of the various expenses related to travel? Consider whether these costs match up to the company’s expectations. It’s important to get these written down along with your list of expenses as providing employees with an expenses policy is the first step. The first question you almost always hear from an employee around an expenses policy is: “So, how much can I spend?”

Once you’ve got all the information gathered you’d find that the policy almost writes itself - the majority of the work has already been done. All that’s left is getting the policy written and making sure employees are adhering to it.

Points to consider when developing a policy

• Be fair with your policy. Employees will respect a difference in the amount more senior employees can claim for an expense versus what they can claim, but they’ll be less happy if the amount is lower than what they’ve previously claimed.• Keep it simple. There is ample opportunity to amend and change the policy. The simpler it is initially, the more likely employees will understand and stick to it• Consider the rules and locations. Hotel prices and meal prices will differ in different regions. There are also endless scenarios where meetings or travel might have to be booked in an emergency.

Things to be aware of

Firstly, the UK Bribery Act 2010, where the legislation is relevant to expenses as it states a business should ensure claims are reasonable and justified, leaving no room for expenses or payments to be perceived as bribes. Having a policy allows a company to monitor and record it’s expenses.

Secondly, the company procedure for expenses. How will an employee have their expenses approved and to whom should they hand the receipts/documentation? This is entirely dependent on the size of the company. Standard procedure would be: employee to line manager to accounts to payroll/HR.

What to do with the receipts

Software Europe did some research along with the Chartered Institute for Payroll Professionals and confirmed that UK businesses no longer need to keep hard copies of receipts for employee expenses, provided that electronic copies exist and subject to a few minor exceptions.

Using an electronic expenses system, such as Expenses from Software Europe, therefore can help to manage staff receipts from expenses such as mileage or subsistence.

Dealing with expenses can be a challenge that will only grow with the size of the business so companies should consider a fully outsourced expenses service to entirely remove the expenses burden. Once you’ve developed your policy, an outsourced expenses service can handle the entire process from initial receipt handling and claim validation, right through to payment direct to employees

Ultimately, your expenses policy isn’t about limiting what employees can claim, it’s about setting out a fair policy to avoid conflicts. It also reduces the time spent checking an expense and having it authorised by the manager or accounts team.

By Chris Groome, commercial salesmanager at Software Europe

Proven expenses technology can help to save thousands of pounds by encouraging more accurate staff claims, particularly around mileage, but it can’t do it without the clear guidelines in place to begin with.

Even the best expenses technology deployments need to be supported by the very best expenses policies. Staff expenses may be necessary and legitimate, but organisations are seemingly spending millions each year covering them based on fuzzy rules, historical beliefs and poor controls. This can have quite an impact on a company’s bottom line.

An expenses policy provides employees with a high level view of what is expected and specifically guides the employee on what is and isn’t an acceptable expense for the company. A policy also provides the practical advice for how claims can be made, the company’s procedure of adhering to policy, processing an expense and monitoring the claims.

For the company, an expenses policy can and will save money and improve efficiency. By implementing an expenses policy all of the company’s employees know where they stand, what they can and can’t claim for and to what limit.

For mileage, one of the largest areas of conflict, the policy can explain how and why journeys are routed a specific way [usually the shortest, as opposed to the quickest, distance between two locations]. Financially, an expenses policy cuts the cost of doing business by providing a robust expenses control function. It also throws out the era of ‘guesstimate’ loopholes and culturally engrained ‘fiddles’ that have occurred in the past. The grey areas are gone and there is a clear mark between acceptable and unacceptable.

How to create a perfect policy

The place to start with an expenses policy is to develop a list of the legitimate expenses that suits your business and the sector, industry and ethos or image of your company. This doesn’t have to be the final list, you can always add further expenses items later – should you miss anything.

Once done, think about where existing staff spend typically falls. Do you have sales personnel that travel a lot? Do they entertain clients etc? What are the average costs of the various expenses related to travel? Consider whether these costs match up to the company’s expectations. It’s important to get these written down along with your list of expenses as providing employees with an expenses policy is the first step. The first question you almost always hear from an employee around an expenses policy is: “So, how much can I spend?”

Once you’ve got all the information gathered you’d find that the policy almost writes itself - the majority of the work has already been done. All that’s left is getting the policy written and making sure employees are adhering to it.

Points to consider when developing a policy

• Be fair with your policy. Employees will respect a difference in the amount more senior employees can claim for an expense versus what they can claim, but they’ll be less happy if the amount is lower than what they’ve previously claimed.• Keep it simple. There is ample opportunity to amend and change the policy. The simpler it is initially, the more likely employees will understand and stick to it• Consider the rules and locations. Hotel prices and meal prices will differ in different regions. There are also endless scenarios where meetings or travel might have to be booked in an emergency.

Things to be aware of

Firstly, the UK Bribery Act 2010, where the legislation is relevant to expenses as it states a business should ensure claims are reasonable and justified, leaving no room for expenses or payments to be perceived as bribes. Having a policy allows a company to monitor and record it’s expenses.

Secondly, the company procedure for expenses. How will an employee have their expenses approved and to whom should they hand the receipts/documentation? This is entirely dependent on the size of the company. Standard procedure would be: employee to line manager to accounts to payroll/HR.

What to do with the receipts

Software Europe did some research along with the Chartered Institute for Payroll Professionals and confirmed that UK businesses no longer need to keep hard copies of receipts for employee expenses, provided that electronic copies exist and subject to a few minor exceptions.

Using an electronic expenses system, such as Expenses from Software Europe, therefore can help to manage staff receipts from expenses such as mileage or subsistence.

Dealing with expenses can be a challenge that will only grow with the size of the business so companies should consider a fully outsourced expenses service to entirely remove the expenses burden. Once you’ve developed your policy, an outsourced expenses service can handle the entire process from initial receipt handling and claim validation, right through to payment direct to employees

Ultimately, your expenses policy isn’t about limiting what employees can claim, it’s about setting out a fair policy to avoid conflicts. It also reduces the time spent checking an expense and having it authorised by the manager or accounts team.